Wednesday head to Deepdale having not lost in the league in seven matches and are in search of a third consecutive win.
But Grayson says playing against the Championship’s top teams brings out the best in his side.
“When we come up against better players, the lads stick their chests out,” he said. “They know if they’re not on their game then we’re going to be found out. We’ve seen a lot of performances so far this season where they’ve done very well and hopefully that’s the case again.
“Wednesday will be backed by a fantastic following and I’m sure there will be a lot of home supporters so it’s got all the ingredients there to be a great game.
“I hope we can maintain the run that we’re on at this moment in time.
“And if we win we close the gap to Sheffield Wednesday and one or two above you.”
Preston have lost just one of their last eight games to climb to 11th in the Championship and nine points off the play-offs.
In 13 matches this season against the ten sides currently above them in the table, Preston have lost only four. Grayson’s side beat league leaders Hull City at Deepdale in December.
Grayson added: “We know it’s going to be a test for us but we’ve really enjoyed the big games and the big atmospheres this year.
“The last biggest one we’ve had was the Hull game where every man of ours played very well and got the victory so hopefully that’s the case again on Saturday.
“We know it’s going to be tough. Wednesday have recruited from the summer and built again in January with the signing of Hooper and McGeady from Everton.
“These are all top, top players and they’ve got one ambition which is to try and get into the Premier League.”
Wednesday full back Marnick Vermijl is ineligible to play for loan club Preston as part of his deal.
And former Owls striker Stevie May will also be absent due to a knee ligament injury which has kept him out since late November.
May is set to undergo surgery next week as part of his recovery and will not feature again this season.